2 Dow Stocks You Can Always Buy and Hold Onto
Jerome Powell, the chairman of the Federal Reserve, recently stated that the Fed could slow down its rate hikes beginning in December 2022. The Dow has gained significantly post this announcement. It went up more than 20% above its 52-week low and entered a new bull market.
Moreover, the U.S. economy remains pretty resilient despite lingering macro headwinds. Consumer spending and strong labor market circumstances might help the economy overcome any possible growth slowdown.
Given the backdrop, investors could consider buying fundamentally sound Dow stocks Johnson & Johnson (JNJ) and Cisco Systems, Inc. (CSCO).
Johnson & Johnson (JNJ)
JNJ and its subsidiaries research, develop, manufacture, and sell various products in the healthcare field worldwide. The company operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.
On November 1, 2022, JNJ entered a definitive agreement to acquire Abiomed Inc. (ABMD), to acquire all outstanding ABMD shares through a tender offer for an upfront payment of $380.00 per share in cash.
This should help the Company enhance its position in MedTech and to provide breakthrough treatments for cardiovascular diseases while driving value for its shareholders.
JNJ has paid dividends for 60 consecutive years. Over the last three years, JNJ's dividend payouts have grown at a 5.9% CAGR. While JNJ's four-year average dividend yield is 2.60%, its current dividend translates to a 2.53% yield.
JNJ's sales to customers came in at $23.79 billion for the third quarter that ended 2022, increased marginally year-over-year. Moreover, its net earnings came in at $4.46 billion, up 21.6% year-over-year. Also, its EPS came in at $1.68, up 22.6% year-over-year.
JNJ's revenue is expected to increase 2.8% year-over-year to $97.66 billion in 2023. Its EPS is expected to grow 3.4% year-over-year to $10.39 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 13.1% to close the last trading session at $178.74.
JNJ's strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
JNJ has an A grade for Stability and a B for Sentiment, Value, and Quality. In the Medical – Pharmaceuticals industry, it is ranked #3 out of 161 stocks. Click here for the additional POWR Ratings for Growth and Momentum for JNJ.
Cisco Systems, Inc. (CSCO)
CSCO designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China.
On November 1, CSCO expanded its portfolio of specializations available through its partner program. The six new fields would focus on customer priorities and represent fast-growing market opportunities for the company and its partners.
On October 26, CSCO announced new features and capabilities for the reimagined Webex Customer Experience portfolio. The new capabilities are expected to deliver new omnichannel customer experiences.
CSCO has paid dividends for 11 consecutive years. Over the last three years, CSCO's dividend payouts have grown at a 3.1% CAGR. While CSCO's four-year average dividend yield is 2.98%, its current dividend translates to a 3.04% yield.
CSCO's total revenue increased 5.7% year-over-year to $13.63 billion for the first quarter that ended October 29, 2022. Its product revenue came in at $10.25 billion, up 7.5% year-over-year. Moreover, its gross margin came in at $8.35 billion, up 3.6% year-over-year.
Analysts expect CSCO's revenue to increase 5.8% year-over-year to $54.53 billion in 2023. Its EPS is estimated to grow 5.7% year-over-year to $3.55 in 2023. It has surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 10.5% to close the last trading session at $49.97.
CSCO's overall A rating equates to a Strong Buy in our POWR Ratings system. It has an A grade for Quality and a B for Stability. It is ranked #3 out of 48 stocks in the Technology - Communication/Networking industry.
Click here to see the additional POWR Ratings for Growth, Momentum, Sentiment, and Value for CSCO.
JNJ shares were trading at $178.55 per share on Friday afternoon, down $0.19 (-0.11%). Year-to-date, JNJ has gained 7.11%, versus a -13.36% rise in the benchmark S&P 500 index during the same period.